Freight railroads don’t prosper because shippers have affection for them. Instead, railroads profit when their services are economically relevant. When freight services net customers fewer benefits than the prices railroads need to charge, the customers disappear and, soon, so do the services. These outcomes are not unique to railroads. They hold for all profit-motivated commerce.
Still, most agree that passenger railroading is different. Private passenger interests merge with public concerns about environmental quality, congestion, regional isolation and economic development. This broader array of interests doesn’t blend easily with for-profit behaviors. Alas, we have Amtrak, the enigmatic poster-child for government gone wrong that has, nonetheless, lasted for nearly 50 years.
Into this scene, interject Richard Anderson, the retired 60-something former Delta Airlines CEO who was tapped last year to head Amtrak. Anderson isn’t very popular in the community of rail enthusiasts. For better or worse, he is trying to run Amtrak a little more like a for-profit business and a little less like a rolling theme destination for retired railfans.
An easy example is Amtrak’s repeal of discounts for students and senior citizens. These are two demographics critical to Amtrak ridership. They’re also two constituencies who will ride trains with or without discounts (neither of us can drive).
By competitive force, the airlines learned to price brutally in the wake of their 1978 deregulation, and they taught their lessons to the freight railroads soon thereafter. The object is to extract every nickel of surplus from every customer. We don’t like it, but we fly, often in the center seat. We buy freight services, and we’ll ride Amtrak trains too, even without the discounts. Why should a federally subsidized passenger carrier willingly leave money on the table for passengers who can and will pay more? If the kids or we elders stop riding trains, Anderson’s Amtrak will adjust its pricing policies. I’m pretty confident about that.
The larger, looming issue is long-distance trains or what the passenger community simply refers to as LDTs. These trains have names that conjure great sentiment—Empire Builder, Crescent, California Zephyr and (Southwest) Chief. Probably correctly, the passenger rail community has concluded that Richard Anderson is willing to subjugate (or even eliminate) the LDTs in favor of more heavily patronized, more economically relevant and often state-supported regional corridor services.
Nobody knows whether this apparent assault of LDTs is necessary or whether it will appreciably affect Amtrak finances. Rationally, picking through Amtrak’s accounting may never be possible. But the fact remains that the guy we hired to run Amtrak seems to think that long-distance trains are a financial impediment.
While it may be true that Richard Anderson couldn’t tell the “A” end from the “B” end of boxcar, that’s not what he was hired for. He was sought because he understands passenger preferences, behaviors and willingness to pay.
I wish it was 1948 and the New York Central’s Hickory Creek observation car was brand new, but neither is the case. It’s time to move on and invent rail passenger service that’s relevant to the 21st Century. If we fail at this, there will probably be no next chance. There’s a Brightline between here and there. Let’s observe it.
Mark L. Burton is Director, Transportation Economics and Research Associate Professor at The University of Tennessee Center for Transportation Research.